Independent Broker Dealers rebranding their RIAs

Changes are as a result of industry demand for RIA options

For years now, the financial services industry has been seeing a shift towards advisors doing more advisory business.  This swing has caused some advisors to explore a variety of independent structures including starting their own RIA or tucking in to an existing RIA.  In a recent article in InvestmentNews, this trend is explored. The RIA space is hot, and brokers are on the move

In this article Jodie is quoted saying-

“The massive growth is on the RIA side,” said Jodie Papike, president of Cross-Search, a recruiting firm. “Most broker-dealers are defensive of that and are fearful of evolving. On the other hand being a totally independent RIA is clearly not for all advisers. The problems facing the broker-dealers is to figure out how to structure the services for breakaway brokers and then what to charge them.”

The most interesting statistics supporting this claim are, “the independent and hybrid RIA channel has increased its advisor head count to 63,000, up 21% in the past five years”, accourding to Cerulli Associates.  Also telling is the fact that in the same time frame the number of RIA’s in our industry grew by 1,500.

To me, one big question is how are Independent broker dealers going to respond to this changing marketplace?  Up until this point I would say most firms have taken the, close our eyes and hope advisors don’t leave us approach, but things are changing.  I believe there has been somewhat of an awakening in that many broker dealers are realizing they can’t run from the changing demands and that they must rebrand their offerings.  Many broker dealers including Cambridge, Commonwealth and Raymond James are now offering RIA only options that allow advisors to drop their licenses and affiliate as a fee based advisor.  Being in the business for 20 years now, I know one thing is for sure, change will continue to be a constant.  My prediction is that advisors looking for an independent business model will continue to see a tremendous amount of variety in offerings.

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